The Association of Mutual Funds in India (AMFI) board on January 30 advised the Asset Management Companies (AMCs) to stop inflows into schemes with international mandates.
Apart from this, the AMFI board also advised the AMCs not to increase international exposure beyond February 1, 2022.
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The latest advisory arrived days after Motilal Oswal Mutual Fund stopped accepting lump-sum and switch-in investments in three of its international schemes. These schemes are Motilal Oswal S&P500 Index, Motilal Oswal MSCI EAFE Top 100 Select Index and Motilal Oswal Nasdaq 100 Fund of Fund.
"AMC shall uniformly implement the direction w.e.f. February 2, 2022, in order to give sufficient time to all stakeholders viz. AMCs, RTAs, Platforms (stock exchanges, MFU, etc.), Intermediaries (MFD, RIA, etc.), and Payment aggregators to make necessary changes to systems and processes," the AMFI advisory said.
"AMCs shall not make any incremental investments in overseas finds or securities beyond what is existing as of February 1, 2022, at the respective mutual fund level. In other words, the total utilisation by each AMS of the overseas investment limit shall be capped at the amount as of eod of February 1, 2022, in order to ensure compliance with the SEBI direction," added the advisory.
Earlier on June 1, SEBI enhanced the foreign investment limit for each mutual fund house to $1 billion from $600 million. The overall limit for the mutual fund industry is set at $7 billion. SEBI is expected to ease this limit soon. This is a temporary glitch of allowable limits being complete, as the Indian MF industry has exceeded the $7 billion limits of investing overseas.